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Accounting for structural transformation in the U.S

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  • Marcolino, Marcos

Abstract

I account for the sources of labor reallocation from the manufacturing sector towards services in the United States for the 1950 to 2010 period. I use a multi-sector model with sector-specific productivity growth and non-homothetic preferences to decompose the sources of labor reallocation into supply-side, demand-side, and wedge distortions. The decomposition is performed in the context of a competitive economy where the competitive equilibrium with wedges reproduces prices and quantities of the economy exactly. During the 1950–2010 period, the demand-side mechanism accounts for 57% of the reallocation of labor and the supply-side for 28%. Focusing only in the sub-period from 1950 to 1980, 70% of the reallocation is demand-driven. In the sub-period between 1980 and 2010, the three sources of labor reallocation are quantitatively important. Demand-side accounts for 47%, supply-side for 42% and wedge distortions for 10%.

Suggested Citation

  • Marcolino, Marcos, 2022. "Accounting for structural transformation in the U.S," Journal of Macroeconomics, Elsevier, vol. 71(C).
  • Handle: RePEc:eee:jmacro:v:71:y:2022:i:c:s0164070421000914
    DOI: 10.1016/j.jmacro.2021.103394
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    More about this item

    Keywords

    Multi-sector model; Structural transformation; Wedge;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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